Ways to Save Money

Want to Save Money on Your Rent or Mortgage? Move to One of These Towns

April 10, 2015
by Lisa Rowan
Contributor

If you could live in a place where housing is considered to be super affordable, you’d probably do it, right? A lower mortgage or rent payment can make a huge difference to your monthly budget.

But would you consider moving to a small town to save more money?

By analyzing a huge pile of statistics, Business Insider (BI) has identified the most affordable small towns in the United States. If you’re stressed about how much your own housing costs or are considering a relocation to an area with lower cost of living, take a look at their findings for some wallet-friendly alternative places to live.

How Business Insider Measured Housing Affordability

A team of BI reporters determined a town’s affordability by calculating how much of a household’s income is eaten up by housing costs.

Lists and rankings associate editor Melissa Stanger, lists and features reporter Emmie Martin, and quant reporter Andy Kiersz examined three types of housing: owned houses with a mortgage; owned houses without a mortgage; and rentals. They limited their analysis to towns with 10,000 residents or fewer.

“To rank the towns,” Andy Kiersz explains in a post on the team’s methodology, “We averaged together the percentage of households with housing costs below 30% of income in each of the three categories, weighted by the prevalence of each category in each town.” The larger the percentage of households with housing costs lower than 30% of their income, the more affordable the town.

They relied on data from the Census Bureau’s American Community Survey, which samples a small portion of the population each year to help determine how federal and state funds are used. While the survey covers a variety of factoids such as education, family and relationships, veteran status and disabilities, the one that’s important for this list is “where you live and how much you pay for some essentials.”

Where are the Most Affordable Towns?

Louisiana and Texas get the award for the most affordable states — Louisiana had eight small towns on the list, and Texas had seven. Business Insider also offered a list by state, featuring the most affordable small town in each.

While you might think that only quiet, out-of-the-way hamlets would make the list, they’re not all one-stoplight towns. A few interesting places stood out from the pack:

  • Quartzsite, Arizona (93.2% of homes are considered affordable): This small town is far from sleepy — it’s a major destination for jewelers, who flock to an annual gem show that lasts two months.
  • Reidland, Kentucky (93.4% of homes are considered affordable): BI notes that the median household income for Reidland is more than $20,000 higher than the median for Kentucky. The town is also known for its low cost of living.
  • Chevy Chase, Maryland (84% of homes are considered affordable): This town is so close to the nation’s capital that there’s even a Chevy Chase neighborhood over the state line in Washington, D.C. “The average household in Chevy Chase earns more than $250,000,” BI notes, “which is incredibly high relative to the cost of real estate in the area.”
  • Enfield, New Hampshire (87.3% of homes are considered affordable): Enfield boasts a poverty level of 0%. The town recently completed a major project, along with surrounding communities, to improve broadband speeds and promote affordable Internet service.
  • Boomer, West Virginia (100% of homes are considered affordable): Let’s call Boomer the king of affordable housing. In the 2010 census, Boomer had only 615 residents.

Why a 30% Cut-Off?

Why is this 30% rule so important in judging these small towns? It’s a fairly standard economical measure of affordability. “Homes that eat up less than 30% of income are generally considered ‘affordable,’ as this theoretically leaves enough income over for other needs,” note the BI reporters.

And many people are finding it nearly impossible to find a place to live that costs less than 30% of their income.

Take New York City, where the median rent costs 58% of the median income in the city. New Yorkers are sacrificing more than half their income to live in the Big Apple. Between 2013 and 2014, rents increased faster than pay in every single one of the 25 largest metropolitan areas in the U.S., Karen Wiese reported last year for Bloomberg.

Some economists have disregarded the 30% rule completely, saying that the arbitrary number was hard enough to achieve in the past, let alone today. Forty-one million households spend more than that recommended 30% on housing, Weise also reported. One-fifth of households spend more than 50% of their income on a place to live.

That’s why Business Insider’s list is so attractive — it’s almost like staying under that 30% goal means achieving the American Dream.

Consider Other Factors Before Planning Your Move

The towns on BI’s list have populations of 10,000 or fewer, so if big city life is all you dream of, you may want to skip this list.

Commuting is also something to consider, as most of the towns on the list are far from the major hubs in their states. “For many families, getting to and from work is the second-largest monthly expense, one that’s directly tied to wear they live,” Weise warns. “A house in a far-out suburb may look cheap, but add in gas for an hour-long commute and the cost rises considerably.”

But many people are shedding their commutes completely and working from home, either for a company that supports telecommuting or as freelancers. If they’ve got good Wi-Fi, any of these towns could be a perfect fit for someone who wants to take their work on the road.

Your Turn: What do you think? Would you move to one of these small towns to reap the financial benefits?

by Lisa Rowan
Contributor for The Penny Hoarder

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